The two main factors that determine business value are cashflow and risk. Other variables that are considered when calculating value include current financial performance, profitability trends, customer base, industry, growth potential, current market demand and many other factors. By analyzing your business and comparable sales of similar businesses in your industry, we can advise you on the proper pricing strategy for your business. Ultimately, any business is worth what somebody else would be willing to pay for it. However, with proper pricing and marketing strategies, we can help you maximize your selling price.
Most businesses sell within 6-9 months. The overall timeframe is dependent on the company’s financial performance, market demand, complexity of the transaction, pricing strategy, and other factors. It’s also important to realize that after a seller accepts a buyer’s offer, legal documents have to be prepared and reviewed, financing needs to be approved, and due diligence must be finalized. The time period required to complete these steps alone is typically 60 days.
We represent businesses in all industries and our experienced team has the expertise needed to find the right buyer for your business. From retail, services, manufacturing and distribution, our firm is knowledgeable on all types of businesses and we will help you navigate the complex process of selling your business.
We have an established network of qualified buyers that are interested in buying businesses with us. This is in addition to those buyers we locate through our listing-specific advertising programs. We mainly work with four types of buyers: individual owner-operator buyers, financial buyers, strategic buyers, and private equity buyers.
We take great pride in our ability to keep all information confidential. At no time will the name of the company, owner or even geographical region be revealed. We carefully screen all buyers and every buyer is required to sign a non-disclosure agreement before receiving company information. In addition, we keep the most important trade secrets of each business completely confidential, even during the due diligence phase, ensuring that truly sensitive information is only revealed days before the closing.
Our fee is a percentage of the sale and is only paid once your business is sold. Since we don’t get paid until you get paid, our interests are aligned with yours. It’s also in our interest to sell your business for the highest price possible. We do not ask for a retainer fee. We are performance-based only!
Most owners find that the frustration, time, and expense involved do not yield cost savings and many end up working with unqualified buyers. In fact, because they do not have access to a large number of qualified buyers, many owners end up selling their business for much less than they could have received by working with a well-established intermediary.
By using an intermediary to sell your business, you are also giving yourself leverage; your agent will be working with a pool of buyers versus you working with only one to try and reach a deal.
Another benefit to using a firm like ours is that we have an existing pool of hundreds of qualified buyers who are actively looking to buy businesses in various industries. For this reason, it is not uncommon for us to receive significant interest and in some cases offers within a few weeks of listing a business.
Lastly, if you hire a CPA to do your tax return and you hire an attorney to help you with legal issues, you also need to hire a professional when it comes to selling one of your largest assets– your business. Selling your business is one of the top five things you will do in your lifetime!
Our team is comprised of individuals with the business and financial background, knowledge, and experience needed to find the perfect buyer for your business. We understand the day-to-day experiences of a business owner and the concerns faced when planning to sell…because we have managed, owned, and sold our own businesses. We will confidentially market your business to maximize your sale price and guide you every step of the way.
The best time to sell is when a business is doing well so that you will capture the maximum value in the sale. It’s best not to wait until after a business has peaked since the selling price will suffer. Buyers do not buy businesses based on potential and never consider what the sales might have been 5 years ago. Their only concern is how well the business is currently performing.
That said, even if your business is not performing at its peak, we encourage you to contact us. We can discuss actions you can take now to best position your business for a sale in the future – whether that is six months out or five years out.
In most cases sellers are cashed out at the closing of the sale, receiving a lump sum payment. Occasionally the bank may require sellers to carry up to 10% of the sale price on a seller note. However even if that is the case, the seller is still paid 90% at closing. Some sellers may offer more substantial seller financing where they take a percentage of the sale price in installment payments over a longer period of time. Offering seller financing is completely optional to the seller. From our experience, most sellers prefer to receive all or most of the purchase price in a lump sum at closing.
The purchase price of your business and the allocation of that price towards business assets versus goodwill dictates how much you will pay in taxes and also affects the buyer’s taxes as well. Most business owners are also able to treat the sale of their business as capital gains and thus typically pay a lower percentage on that income than they would “normal” income from the operations of their business. We encourage you to contact a CPA before and after the sale of your business for details, exceptions and expert advice specific to your situation.
After an offer has been accepted by the seller, the buyer is entitled to review any and all supporting source documentation that was used to prepare the financial statements represented in the company prospectus. The supporting documentation usually includes company bank statements, merchant account statements, company tax returns and supplier invoices for the past 3 years.
With our compensation being 100% performance based, we invest a considerable amount of time, energy and money upfront to represent each business. Since there is no guarantee that we will actually be paid for our work, it’s customary for buyers to sign an exclusive listing agreement, which gives us the time we need to get the deal done and outlines the terms of our representation.